Our education “investment”

Nearly every politician or candidate speaks of education spending as an “investment.” Some claim any kind of government spending is an “investment,” but education is always so termed, particularly by teacher unions, as if the more spending on schools, the better schools will be, and the better our country will be.

Anecdotally, this doesn’t make sense, at least in Wisconsin. The state has spent more than nearly every other state for decades for our alleged ‘great schools.” Based on education “investment,” Wisconsin should have the number one state economy in the U.S. And yet, in such measures of economic health as per capita personal income growth, business start-ups and incorporations, Wisconsin has trailed the nation since the late 1970s.

Louis Woodhill demonstrates what our education “investment” has gotten us:

Many so-called “Conservatives” voice agreement with this notion. The unstated assumption on both sides of the aisle is that “investment in education” produces an attractive return. But is this true?

No, it’s not. The numbers strongly suggest that, at least in economic terms, America has gotten nothing for the enormous increase in educational “investment” that we have made over the past 60 years. …

So, how would we know if increased government “investment” in education was producing a return? We would see a steady rise in the ratio of GDP to “nonresidential produced assets” over time. Our GDP is produced by a combination of physical capital and human capital. Accordingly, if the economic value of our human capital were rising, the impact would show up in the numbers as increasing productivity of physical capital.

Now, here is the bad news. While total real ($2010) government spending on education increased almost 13-fold from 1951 to 2009, the measured GDP return on physical capital actually declined slightly, from 47.7% to 44.1%. This could not have happened if we were getting an appreciable economic return on our huge “investment” in education. …

Assuming that about 25% of our total population is in school at any one time, average real (2010 dollars) government spending per student rose from $1,763 in 1951 to $12,209 in 2009. This is an increase of about 7 times. Assuming an average of 13 years of education per student (some go to college, some drop out of high school), this means that during this 58-year time period, we increased our real “investment” in the human capital represented by each student from $22,913 to $158,717.

Meanwhile, we have also been investing more in physical capital. Real nonresidential produced assets per worker increased from $79,278 in 1951 to $206,717 in 2009. So, each worker in 2009 had $127,439 more in physical capital and $135,804 more in educational “capital” to work with than he did in 1951.

Unfortunately, it is clear from the numbers that GDP tracks only physical assets, and not the sum of physical assets and educational “assets”. Excluding the GDP produced by the housing stock, the ratio of GDP to nonresidential produced assets has been essentially constant over the 59 years 1951–2009 (it has oscillated with the business cycle around a midpoint of 48.2%).

So, it appears that our massive “investments” in education have produced no measurable economic return. Should we be surprised by this? No. Average scores on standardized tests have not risen, despite the fact that we are “investing” seven times as much in real terms in each student than we did six decades ago. So, even by the measures used by the educational establishment, it is clear that the higher spending has not created any additional human capital. …

Also, imagine if, instead of being given a 2009 education for $158,717, an average student were given a 1967-style education for about $58,000, and $100,000 in capital with which to start his working life. This would be sufficient to start any number of small businesses. Alternatively, if put in an IRA earning a real return of 6%, the $100,000 would grow to about $1.8 million over 50 years.

The huge government “investments” made in education over the past 50 years have produced little more than “Solyndras in the classroom”. They have enriched teachers unions and other rent-seekers, but have added little or nothing to the economic prospects of students.

I eagerly await the next candidate for Wisconsin political office who points out what our billions of dollars spent on education has gotten us. (And if increasing education spending by seven times is producing no test score improvement, well, seven times zero is zero.) I would also love to see a candidate for superintendent of public instruction who didn’t merely parrot what the K–12 education establishment says. For that matter, I’d love to see a school board member or candidate for school board who didn’t merely parrot what the school district administrator said or wanted. (I tried.)

Here’s an indirect example: I went to a meeting for those interested in the Ripon Area School District’s charter middle school, which starts in September. One of the teachers involved mentioned that the charter school is seeking a Department of Public Instruction waiver from the state’s picayune (my term, not his) requirements specifying a certain number of minutes of instruction per subject. (Waiver applications are commonplace among charter schools.) That prompted a parent to object to the waiver application because, she claimed, she wanted her child to be forced to learn such subjects as physical education or art.

I didn’t say anything, because the meeting wasn’t a place to start a political fight. It’s hard to argue against the value of being a well-rounded person, except that school is not where one necessarily becomes a well-rounded person. (Ever heard of church? Scouting?) But the aforementioned instruction-time requirements weren’t created in the educational process; they were created in the political process. (For example, the labor history requirement shoved through the state budget by Gov. James Doyle.) And as the father of children involved in soccer, basketball, swimming and baseball, a physical education requirement seems like a huge waste of time.

As a father of a second charter school student, I find the self-directed nature (within reason) of charter schools appealing. As someone who believes government screws up at least as much as it does well, I find the ability to skirt government’s definition of what students are supposed to learn especially appealing. The time I spent in, for instance,  middle school sewing class is time I’ll never get back, and I suspect readers can recall their own wastes-of-time classes.

Is having an educated populace a good thing? Of course it is. But among other things, education is supposed to prepare you for the next level of your life — post-high-school education in the case of high school, and your career in the case of  post-high-school education. I don’t find education spending the equivalent of government spending on the War on Poverty, where, it’s been written, the country achieved as much as if the federal government had spent nothing on the War on Poverty. But it does seem obvious that the billions spent in this state and the trillions spent nationally have not achieved anything close to the rate of return all that spending should have achieved. When they were alive, I would have preferred having my eighth-grade-educated grandmother and father-in-law representing us, because despite their lack of education, they were wiser than anyone you’ll run into in the state Capitol.

Education is also supposed to teach you to think for yourself. Those who are touting spending billions of dollars in annual school spending apparently don’t want you to think of where it’s going, or for what.

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